North Block shadow lengthens on UTI deals
VSNL first quarter net slumps
LIC stake in Corp Bank under IRDA scanner
Organon to raise stake in Infar
Hind Lever tops adspend chart
Tax rules for select groups amended
DSQ sizzles as bourses lift bar on trading
Japan prefers China to India
Foreign Exchange, Bullion, Stock Indices

 
 
NORTH BLOCK SHADOW LENGTHENS ON UTI DEALS 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, July 27: 
The lawyer representing former Unit Trust of India (UTI) chairman P. S. Subramanyam today said Yashwant Sinha used to speak to his client on financial policies and investment decisions taken by him, even as the finance minister swears in Parliament he knew nothing about the affairs of the country’s largest mutual fund and never interfered in its business.

The startling facts emerged during a court hearing where the former UTI boss was denied bail along with executive directors M. M. Kapur, S.K. Basu and stock broker Rakesh Mehta. Subramanyam’s counsel argued before the special judge that his client was the only one to have disclosed names, co-operated with the investigations and, therefore, should be released.

Subramanyam is believed to have said during his interrogation that “people in high places and invisible hands” had swung the Cyberspace Infosys deal. “The finance minister has several times said assistance should be given to the states of UP and Bihar,” said Satish Maneshinde, who is pleading the former UTI boss’s case in court.

The three men, arrested on charges of misappropriating Rs 32 crore worth of public money, were remanded in police custody till August 3. Their bail applications were rejected on the ground that more time was required for custodial interrogation that could help sleuths track down the kingpins of the scam.

“Investigations indicate the accused entered into shady deals. This is a massive UTI scam which has opened a Pandora’s box of filthy deals with far-reaching consequences on stock exchanges. The CBI must have enough time to draw up a white paper on the issue. Nothing is sacrosanct. Neither the Bihar or the UP governments. We are concerned with the truth ,” the judge said.

The court agreed with additional solicitor general S B Jaisinghani’s point that the three men should be questioned along with prime accused Arvind Johari, promoter of Cyberspace Infosys, which set up an infotech park with the UP government.

The agency accused Johari of inducing top UTI officials through Rakesh Mehta of Renaissance Securities to buy 3,45,000 Cyberspace shares in a deal that cost UTI Rs 32 crore in losses. It said dubious deals were sealed by the UTI top-guns to save Mehta from big losses.

“Mehta averted the losses by using his proximity to the UTI management, especially M M Kapur, to sell his shares to the Trust,” the CBI said.

The defence lawyers said Subramanyam and Mehta, being based in Mumbai, would co-operate with the CBI in its probe if they were released. CBI told the special court that the examination of two officers as witnesses in the UTI rip-off has thrown up important clues and leads in the case.

According to Jaisinghani, UTI purchased 40,000 shares of Cyberspace Infosys between September 20 and 25 last year for Rs 3.33 crore from Mehta when there were no buyers in the market even though the price was around Rs 830 or so. Neither Kapur nor Mehta disclosed the clandestine transaction during interrogations, but the agency unearthed the fact and grilled them on it.

CBI said the three accused held high positions in UTI, which gave them considerable clout and influence in the financial sector. It feared Mehta would scuttle the probe if he is allowed to remain on the loose.

There are plans to examine 10 to 12 UTI officers and executives of other institutions, some of whom are out of the city now.

The agency says its investigation will now centre on the examination of vital documents collected from UTI, SBI Capital Markets, BSE, NSE, UTI Securities Exchange. It will find out where the Rs 32.08 crore paid by the UTI on July 27 last year and Rs 3.33 crore paid to Renaissance Securities for purchase of 40,000 shares in September 2000 had been stacked by the beneficiaries.

Meanwhile, officials from SBI Capital Markets were grilled by CBI on Thursday over their research report on Cyberspace Infosys. The company, along with UTI Securities Exchange, were co-lead managers in the Rs 100-crore private placement with the Trust.

S Bhasin, head of mergers and acquisitions and M. M. Joseph, head of research at the company, were summoned on Thursday.

   

 
 
VSNL FIRST QUARTER NET SLUMPS 
 
 
OUR BUREAUX
 
Mumbai, July 27: 
Videsh Sanchar Nigam Ltd (VSNL) has reported a 4.54 per cent decline in net profit at Rs 365.5 crore for the first quarter ended June 30 compared with Rs 382.9 crore in the same period last year.

Net sales in the reporting quarter were also lower by 10.19 per cent at Rs 1,528.3 crore as against Rs 1,701.8 crore in the previous corresponding quarter, VSNL informed the Bombay Stock Exchange today.

Other income stood at Rs 113.8 crore as against Rs 155.2 crore in the same period last year, it said.

ICICI net up 13%

ICICI Ltd has posted a 13 per cent rise in net profit for the first quarter of the current fiscal to Rs 326 crore as against Rs 287 crore in the same period last year.

During the quarter, while the term-lending institution’s fund-based income rose to Rs 2,207 crore (Rs 2,001 crore), net-based income declined to Rs 371 crore (Rs 375 crore).

ICICI’s net NPA ratio was 5.1 per cent during the quarter and the net NPAs outstanding were Rs 3,007 crore. Provisions fell to Rs 109 crore as against Rs 115 crore in the previous corresponding quarter.

ITC Bhadrachalam

ITC Bhadrachalam Paperboards Ltd has reported a substantial dip in net profit to Rs 4.59 crore during the first quarter ended June 30 as against Rs 7.15 crore in the previous corresponding quarter.

The fall in net profit was mainly due to provisioning of Rs 2.82 crore of deferred income tax to comply with the Indian accounting standards introduced in the current fiscal, a company statement said.

The gross sales of the company, however, showed a marginal hike to Rs 150.30 crore as against Rs 147.63 crore during the same period last year.

GTB profit dips

Global Trust Bank (GTB) has declared a lower profit of Rs 16.30 crore for the first quarter after making an ad-hoc provision of Rs 15 crore, thus registering a 56 per cent drop in net profit compared with Rs 37.16 crore during the corresponding period last year, a GTB release said here today.

The bank has maintained a strong capital adequacy ratio of 13.58 per cent, it said.

The bank’s total income at Rs 260.98 crore was marginally higher compared with Rs 259.37 crore in the corresponding previous quarter. Global Trust Bank’s operating profit dropped by 27.75 per cent.

   

 
 
LIC STAKE IN CORP BANK UNDER IRDA SCANNER 
 
 
FROM DEVLIN ROY
 
New Delhi, July 27: 
The Insurance Regulatory and Development Authority (IRDA) is scrutinising Life Insurance Corporation’s plans to pick up a strategic stake in the Mangalore-based Corporation Bank as it exceeds the maximum investment limit that the insurance watchdog has laid down for life insurance companies.

According to sources, the strategic acquisition of 27.32 per cent stake acquired by LIC exceeds the prudential norms of the insurance watchdog which has laid down that a life insurance company cannot invest more than 10 per cent of its controlled funds in any other company or pick up a stake of more than 10 per cent in a company’s equity, whichever is lesser.

Sources revealed that some of the IRDA board members have objected to the strategic stake purchase as it clearly exceeds the prudential investment limits set by IRDA.

However, a final decision on this is expected shortly.

Sources added that if IRDA vetoes LIC’s proposal, the life insurer may be asked to reduce its current 12.32 per cent stake which has been acquired through market purchases.

According to reports, Life Insurance Corporation already has picked up this stake in Corporation Bank through open market purchases and intends to acquire another 15 per cent of the equity at a negotiated rate at an investment of nearly Rs 300 crore.

As per the plans, LIC will also pick up five crore shares of Corporation Bank’s primary dealership subsidiary, Corp Bank Securities.

Corporation Bank, on the other hand, would participate in an information technology venture to be floated by LIC and also act as one of the largest agents of the insurance giant after the stake is purchased.

Corporation Bank has already appointed international audit firm Deloitte, Haskins and Sells to value the bank and set the price for the negotiated deal for the stake purchase by LIC.

Sources said prior to the decision to take a strategic stake in Corporation Bank, LIC had decided to float a bank on its own. However, its request was not accepted by the government and so the internal committee set up by LIC took the decision to pick up a strategic stake in a public or private listed bank with good fundamentals.

   

 
 
ORGANON TO RAISE STAKE IN INFAR 
 
 
BY PALLAB BHATTACHARYA
 
Calcutta, July 27: 
Organon Participations of the Netherlands, an Akzo Nobel group company, is set to acquire the entire 25.52 per cent stake of the Indian promoters in Infar India, for a consideration of Rs 44.19 crore.

The acquisition will raise the Dutch company’s stake in the city-based pharma company to over 76 per cent from the existing 51 per cent.

Confirming the move, the Indian promoter and chairman of Infar, S. G. Mehta, said the agreement between him and Organon will be signed on Monday. “We have decided to sell our stake to Organon because the offer from the Dutch company is good enough. Organon will pay Rs 285 per share, while the Infar scrip is hovering at Rs 180-185,” Mehta said.

Mehta said he has decided to exit in the interests of Infar, which needs heavy investment to grow. Organon, which has strong resources and a worldwide network, will be able to make this investment as and when required. Incidentally, the Dutch multinational has also acquired most of the stake held by the financial institutions to gain management control in Infar. Sources said Organon is considering a proposal to buy back the public holding at a later stage through an open offer, in order to acquire 100 per cent control in Infar. The Organon officials, however, could not be contacted despite several attempts made by The Telegraph. The financial institutions have a 3 per cent stake in Infar, while around 22 per cent is with the public.

Incidentally, Organon recently bought out B.K. Birla’s stake in Centech Chemicals in a similar fashion. Organon, which contributes around 47 per cent to the operating income of the Akzo Nobel, now operates in over 80 countries. Infar, which has two production units in Calcutta, registered a turnover of Rs 127 crore in the year ending December 2000, while net profit rose to Rs 17.86 crore from Rs 14 crore in the previous fiscal.

Last year, Infar’s wholly owned subsidiary, Intercare Ltd, had been amalgamated with the parent company. The company has also divested its veterinary business.

   

 
 
HIND LEVER TOPS ADSPEND CHART 
 
 
FROM RAJA GHOSHAL
 
New Delhi, July 27: 
FMCG companies still rule the roost when it comes to the quantum of adspend. Nine of the top 10 adspenders in the first six months of the year happen to be from the FMCG territory. Leading the pack is none other than Hindustan Lever Limited with its total adspend in print and television put at Rs 603.88 crore. While Coca-Cola India stands at number two with Rs 315.13 crore, Pepsi comes a distant third with an adspend of Rs 147.79 crore.

According to the latest January-June ORG MARG survey on adex (ad expenditure) in the two leading media channels, Paras Pharmaceuticals at number five, is the only non-FMCG company on the list in the strictest sense of the term. Paras, makers of over-the-counter (OTC) products like Smyle and ItchGuard, reported an adspend of Rs 138.71 crore. At number four is Godrej Soaps with Rs 147.37 crore. Bharti Telecom, with an adspend of Rs 66.37 crore, stand at number 12.

The study, which does not take into account spending on advertisement through the internet, radio, cinema, outdoors or other media, shows FMCG companies leaning heavily towards the couch potato.

Of the Rs 603. 88 crore spent by HLL, Rs 592.50 crore was spent on TV ads and a modest Rs 11.38 crore on print. Coca Cola has spent Rs 298.18 crore on TV ads and Rs 16.95 crore on print. Pepsi shovelled Rs 139.88 crore towards television and just Rs 7.9 crore to print.

However, a spokesperson from ORG MARG adds the cost data are based on card rates and could show variations from final negotiated rates. He adds that as per industry sources, discounting is higher on the television channels.

Among the FMCG categories, aerated soft drinks, with a collective adspend of Rs 399.54 crore, occupy pride of place in both television and print.

Next comes toilet soaps with Rs 379.48 crore, followed by shampoos with a spend of Rs 220.77 crore. They are followed by toothpastes, hair oils and washing powders/liquids in that order.

Coke and Pepsi are predictably, the two highest spenders in the soft drinks arena. In toilet soaps, it is Hindustan Lever, which with a spend of Rs 168.11 crore in both TV and print comes first, followed by Godrej Soaps with Rs 73.77 crore. The aerated drink makers were the biggest spenders on TV.

As far as the print medium is concerned, corporate advertising accounts for the biggest chunk at Rs 130 crore, followed closely by computer education institutes at Rs 127 crore.

The study covers all categories and 600 publications based on the criterion of circulation and ads per issue and 65 TV channels based on viewership.

   

 
 
TAX RULES FOR SELECT GROUPS AMENDED 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, July 27: 
The government today modified income tax forms to make tax deducted at source (TDS) claims easier for senior citizens and women, besides simplifying rebate claims on income from brokerage and commissions. It issued a notification amending Forms 13 and 15AA of the Income Tax Rules 1962 for obtaining a certificate for deduction at lower rate under Section 197 of the Income Tax Act 1961, an official release said.

Subsequent to the amendment, a person deriving income from commission or brokerage, on which tax is required to be deducted at source under the provisions of Section 194H of the Income Tax Act 1961, may make an application in Form 13 for obtaining a certificate for ‘no deduction of tax at source,’ or deduction of tax at a lower rate. Two new columns for tax rebate under Section 88B for individuals above 65 years, and Section 88C relating to tax rebate for women below 65 years, have also been inserted.

   

 
 
DSQ SIZZLES AS BOURSES LIFT BAR ON TRADING 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, July 27: 
The DSQ Software scrip sizzled on the stock markets today after the two premier bourses of the country—Bombay Stock Exchange (BSE) and National Stock Exchange (NSE)—decided not to bar trading in the counter.

The decisions follow the ad-interim injunction granted by the civil court in Chennai, which restrained both the exchanges from suspending the DSQ scrip.

Both the exchanges had decided to suspend trading in DSQ for non-compliance of listing rules. While the scrip was supposed to have been suspended on NSE from today, BSE had ordered suspension from July 30.

The DSQ scrip opened at Rs 29.25 today and it remained locked at the upper circuit limit of 20 per cent throughout the day. The counter closed at Rs 34.80 and it witnessed 4355 trades of over 9.99 lakh shares. This resulted in a turnover of Rs 3.33 crore on the BSE.

The Securities and Exchange Board of India had recently restrained DSQ Software and its promoter Dinesh Dalmia from accessing capital markets for one year and debarred Dalmia from dealing in securities for one year. It also cancelled DSQ’s acquisition of Fortuna Technologies.

   

 
 
JAPAN PREFERS CHINA TO INDIA 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, July 27: 
The investment environment in India is not so hot as in China. This was the message of the Japanese delegation at the 23rd joint meeting of the standing committee of Indo-Japan Business Cooperation Committee(IJBCC) organised by Ficci. Jiro Aiko, chairman of the standing committee of JIBCC who is also the chief of Sony corporation said, “Due to psychologically negative effects of economic sanctions, direct investment from Japan to India has been declining for the past two to three years and trade has been flat.”    

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 47.14	HK $1	Rs.  5.95*
UK £1	Rs. 67.16	SW Fr 1	Rs. 27.05*
Euro	Rs. 41.32	Sing $1	Rs. 25.85*
Yen 100	Rs. 38.05	Aus $1	Rs. 23.65*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 4435	Gold Std (10 gm)Rs. 4370
Gold 22 carat	Rs. 4190	Gold 22 carat	    NA
Silver bar (Kg)	Rs. 7150	Silver (Kg)	Rs. 7225
Silver portion	Rs. 7250	Silver portion	    NA

Stock Indices

Sensex		3251.53		-7.50
BSE-100		1528.21		-0.93
S&P CNX Nifty	1051.70		-1.70
Calcutta	 118.31		-0.34
Skindia GDR	   NA		  -
   
 

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